BNY Mellon is rolling out a blockchain-based transfer agency platform that will record fund transactions and investor ownership onchain for its $8.6tn transfer agency business, in a move that could reshape how global fund records are maintained.
The world’s largest custodian, which oversees more than $59tn in assets under custody and administration, will run the new digital transfer agency alongside its existing infrastructure rather than abandoning traditional systems immediately, according to a report first published by the Financial Times.
The new service will handle core transfer agency tasks – processing subscriptions and redemptions and keeping definitive records of who owns each fund share – but will do so using distributed-ledger technology to create a single, shared register of ownership.
Baillie Gifford, BlackRock and BNY Mellon’s Dreyfus money-market and cash-management arm are expected to be among the first institutions to use the platform for forthcoming products, underlining the scale of early interest from major asset managers.
Shared ledger aims to remove duplication
Transfer agents typically operate behind the scenes, managing the flows of investors into and out of funds and maintaining precise ownership records. Those processes often involve multiple intermediaries, each keeping their own database and reconciling it against others, which can add cost, delays and operational risk.
BNY Mellon’s new blockchain system is designed to replace this fragmented model with a common, synchronised ledger. By using an onchain record accessible to authorised parties, the bank aims to cut down on duplicate data, speed up settlement and support markets that increasingly expect to operate across different time zones and, potentially, around the clock.
Carolyn Weinberg, BNY Mellon’s chief product and innovation officer, said the initiative is intended to rethink how markets handle the mechanics of fund transactions by moving the underlying records “onchain”, rather than changing the investment products themselves.
The bank’s transfer agency operation currently services around $8.6tn in assets across approximately 7.6 million investor accounts, highlighting the potential impact if the technology is adopted at scale.
Early adopters move into tokenised funds
Baillie Gifford is using BNY Mellon’s digital transfer agent to support what it describes as the UK’s first fully native, regulated tokenized fund. The Edinburgh-based investment manager runs about $262bn (£197bn) and is among the first to test how a regulated fund can be operated with a blockchain-native share register.
BlackRock and Dreyfus are also expected to deploy the new service for planned tokenized or blockchain-enabled products, reflecting the broader push by large asset managers to explore tokenization as a way to streamline fund operations.
The underlying investment strategies in these funds remain unchanged. Instead, asset managers hope that representing fund shares on a blockchain will make issuance, transfer and settlement more efficient while preserving existing regulatory and structural frameworks.
Part of a wider tokenization drive on Wall Street
The launch is the latest step in Wall Street’s broader move towards tokenization and digital market infrastructure. BNY Mellon has already worked with Goldman Sachs on a system that records ownership of selected money-market funds using blockchain-based representations.
The new transfer agency platform goes further by embedding distributed-ledger technology into BNY Mellon’s core fund-servicing infrastructure, rather than treating it as a peripheral pilot.
Despite that shift, the bank does not expect conventional systems to disappear in the near term. BNY Mellon anticipates that traditional and blockchain-based rails will operate in parallel while institutions test how the technology performs under existing rules and security standards, and as regulators assess its implications.
That dual-track approach reflects the priorities of large financial firms, which are keen to capture the operational efficiencies of a shared ledger but remain constrained by strict requirements on custody, compliance and record-keeping.
For BNY Mellon, the objective is to maintain its central role in the fund ecosystem as record-keeping evolves, ensuring that as ownership records increasingly move onchain, the bank continues to sit at the heart of how those assets are administered.
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley and Citigroup also recently featured at the top of the newly launched Strategy Bitcoin Banking Adoption Index, which assessed the extent to which major banks are engaging with bitcoin-related services and infrastructure.
